LITTLE ROCK — Leaders of Arkansas’ second-largest retirement system are considering how to adjust retiree benefits with the goal of reducing the system’s nearly $2.3 billion in unfunded liabilities, but retirees are concerned they’ll be financially hurt by the changes.
Trustees for the Arkansas Public Employees Retirement System decided Tuesday to draft four bills, The Arkansas Democrat-Gazette reported . The system has about 36,000 retired members and 46,200 working members, according to Gabriel, Roeder, Smith & Co., a Michigan-based consulting firm.
One bill would have newly hired members and members with less than five years of service pay 6 percent of their salary to the system, up from 5 percent. Another proposed change would reduce the benefit multiplier from 2 percent to 1.8 percent.
Trustees are also seeking to increase the period used to determine final average compensation from 36 months to 60 months. The final bill seeks to reduce interest paid on member contributions from 4 percent to 2 percent annually.
The adjustments would’ve saved the system around $24 million if they’d gone into effect in June, according to the consulting firm.
Trustees have also instructed the consulting firm to research the potential savings from adjusting how retirees’ annual cost of living adjustments are determined. Retirees currently receive a compounded 3 percent cost of living adjustment annually. The trustees are considering giving themselves the flexibility to set the adjustment so it doesn’t exceed the inflation rate.
Retirees have expressed concerns that the changes could greatly harm retired employees who live on a fixed income. Lex Dobbins, a retired Department of Health employee, asked trustees to maintain the 3 percent cost of living adjustment rate for those who have already retired.
“It should be noted that working members would have the flexibility to adjust their portfolio and possibly work longer in order to compensate for any potential losses of income due to a reduction or elimination of the (cost of living adjustment). As retired employees, we do not have that option,” Dobbins said.
The filing deadline for retirement bills is Jan. 24.